Buying a home is one of the biggest financial decisions Canadians make. But finding the right mortgage, and understanding its true cost, can be difficult. At the same time, high construction costs, financing barriers and lengthy approvals continue to constrain housing supply.
The Budget 2026 measures aim to address both sides of that challenge: making mortgages easier to compare and obtain, while helping builders bring more homes to market.
Here are the key proposals and their potential implications for buyers, homeowners and builders.
Making Mortgage Rates Easier to Compare
The budget proposes new regulations to improve publicly available information on insured mortgage rates, with that information to be published by the Bank of Canada.
Better rate information could give borrowers a stronger starting point when shopping around or negotiating with lenders. However, a competitive rate is only part of the picture. Borrowers should also compare prepayment privileges, penalties, portability and other restrictions that can affect the overall cost of a mortgage.
Introducing CRA Income Verification for Mortgage Applications
The budget proposes giving the Canada Revenue Agency authority to enter into agreements with mortgage lenders and insurers to provide an income verification service.
The proposed investment is $13 million over three years, beginning in 2027–28, to develop and pilot the service, with industry funding arrangements contemplated after that initial phase.
The objective is to make mortgage applications more reliable and efficient while helping deter fraud. Direct verification could reduce uncertainty about income documentation, although the service’s practical impact will depend on its final design, including borrower authorization, privacy safeguards and procedures for correcting inaccurate information.
This is a proposed service, not an immediately available change to the application process.
Expanding Access to Optional Mortgage Insurance
The budget proposes increasing the home price limit for optional mortgage insurance from $1 million to $1.5 million. It would also permit 30-year amortizations for these insured mortgages where at least one borrower is a first-time home buyer or the property is newly built.
Optional mortgage insurance is distinct from the insurance generally required when a buyer makes a down payment of less than 20%. Expanding eligibility could give lenders more financing options and potentially support greater competition.
For eligible borrowers, a longer amortization could lower scheduled payments. The trade-off is that repaying the same loan over a longer period generally increases total interest costs, assuming the same interest rate.
These proposals should not be read as removing down-payment requirements or guaranteeing mortgage approval.
Improving Transparency Around Mortgage Penalties
The government also proposes consulting on ways to improve transparency around prepayment penalties for insured mortgages.
These charges can be significant when a homeowner sells, refinances or switches lenders before the end of a mortgage term. Clearer disclosure could make it easier to compare products and understand the financial consequences of ending a mortgage early.
Importantly, a consultation on transparency is not a proposal to eliminate or cap penalties. Borrowers should continue reviewing their mortgage’s penalty calculation and prepayment terms carefully.
Supporting “Missing Middle” Housing
The budget describes mortgage insurance changes intended to improve financing for smaller multi-unit developments, with an announced implementation date of February 1, 2027.
The measures include:
- New mortgage insurance flexibility for three- and four-unit homes.
- Permission for private mortgage insurers to insure loans on residential properties containing five to fifty units.
For newly built three- and four-unit properties, the budget’s example describes insured construction financing of up to 90% of property value, without a maximum property value or a requirement that the builder occupy a unit. It also describes the ability to retain the completed property as rental housing with an insured mortgage amortized over up to 30 years, or sell the homes individually.
These changes could address financing barriers for small-scale builders. Actual access will depend on the final program requirements, lender underwriting and insurer approval.
Investing in Faster, More Efficient Construction
The budget also proposes investments aimed at improving housing construction productivity:
| Proposed investment | Intended purpose |
|---|---|
| $100 million over three years, starting in 2027–28 | Support municipal electronic permitting and adoption of artificial intelligence |
| $300 million over three years, starting in 2028–29, plus $200 million in future years | Expand industrial capacity for modern construction methods |
| $67.7 million over four years, starting in 2027–28, plus $101.2 million in future years | Modernize housing data and establish common standards for modern construction methods |
The budget also describes more timely updates to national model building codes and investment incentives through the proposed Productivity Mega Deduction.
These measures target delays and costs in delivering new housing. Their effect on affordability will depend on implementation, municipal participation and whether efficiencies translate into additional supply or lower prices.
Extending the Foreign Buyer Ban with a Proposed New-Build Exemption
The budget proposes extending the federal restriction on foreign purchases of existing residential properties to January 1, 2029, while exempting new residential properties.
The proposed distinction is intended to preserve existing homes for Canadians while attracting investment into new supply.
The final wording will matter, particularly the definition of a new residential property and the treatment of transactions already underway. A federal exemption would not, by itself, remove separate provincial or municipal foreign-buyer taxes or restrictions.
